Tuesday, March 14, 2006

Repeal!! The Poison Pill Bill

Ah, just when you thought Louisiana politics wasn't any fun to watch any more along comes a bill which should provide hours of entertainment in the upcoming session. The bill, HB 244, "Provides for private providers under the Local Government Fair Competition Act" is the first of the Robideaux's three anti-"Fair" Competition Act bills prefiled Monday. (The second, 245, is simple repeal and I've commented on it a bit earlier.)

HB 244 is a poison pill bill. A poison pill bill, like a poison pill amendment is designed to fail. But in failing it accomplishes the ends of its authors. My fond hope is that it will die gloriously and exuberantly amid huge gouts of publicity.

On the face of it the bill is an attempt to amend the Local Government Fair Competition Act in such a way that it will actually begin to live up to its name. That is, it would inject a little fair competition into a game the original bill rigged in favor of the telecom providers.

How could this be fun? Let me count the ways:
1) This law would only apply to telecom providers that had accepted "government funding." (If you can prove you are not feeding at the public trough, if you are really "private," you don't have to abide by the same rules that apply to government.)
Fun testimony at a commerce committee hearing on the bill: academic types talking about the astonishing amount of money BellSouth and ATT have accepted, nay demanded, from the public till over the years. Plenty of charts and graphs. A nice long discussion focusing on whether tax breaks from Lafayette Parish constitutes funding Cingular under the meaning of the law. An even more convoluted discussion that tries to understand whether providing below-market-value power to Lafayette's Cingular call center is also a way of "funding" BellSouth.

Entertaining aspect: Watching so-called conservatives rising to advocate not altering BellSouth's Local Government (un)Fair Competition Act (LG(u)FC) on the basis that, as a matter of principle, they are against government intervention in the business world.
2) Corporations that have accepted government funding would have to abide by the same rules the current law imposes on LUS to ensure it doesn't take advantage of its private competition. The new law would impose these restrictions (found in the Louisiana statues at: RS 45:844.53) on both private-but-government-funded corporations and on entities like LUS. Clauses include forbidding cross-subsidization, forbidding the sale of below cost services, mandatory opening of its books to the PSC and the legislative auditor in order to ensure that the law is being followed and regular, onerous reporting requirements.
Fun testimony at a commerce committee hearing on the bill: Watching BellSouth lobbyists panic out over the idea that they can't use money from the highly profitable Cingular wireless to fund their failing wire-line business. Watching Lafayette representatives asking those same lobbyists how that differs in principle from Lafayette using money from other parts of its utility business to fund a start-up competitive with giant ATT/BellSouth. Watching those questions posed to Bill Oliver, president of BellSouth Louisiana.

Entertaining aspect: It should be fun to watch the twists and turns that BellSouth (and ATT) use to attempt to justify imposing regulatory disadvantage only on one group of new competitors while leaving telecom giant BellSouth unregulated. They will surely be jittery since they know that some unpleasant Louisiana representative is likely to point out the hypocrisy of BellSouth arguing to impose heavier restrictions on new competitors in Louisiana while at the federal level desperately seeking exemption for itself from local cable franchises on the grounds that the public interest is served by lighter restrictions on new competitors.
3) The proposed law would require BellSouth (and similar government-funded "private" corporations) build their networks out to include the whole community. It requires that if one citizen is served, that the same service be offered to all. (LUS has promised this, Cox already does so, and BellSouth has promised to never do so--even if "funded" by local government.)
Fun testimony at a commerce committee hearing on the bill: I leave this as an exercise for the reader. What twisty justification will they use to claim they shouldn't have to serve all of the citizens that its cable and municipal competitors do. What is the rational justification for cherry-picking and serving only the most profitably wealthy?

Entertaining aspect: It is BellSouth's worst nightmare to be required to compete on an equal footing with both Cox and LUS by serving the same population that they do. It will be entertaining to see if Cox can be induced to make a little hay by testifying in favor of this portion of the bill since BellSouth and its brethren are advocating laws this very week in the federal senate commerce committee that would exempt it from ever having to serve the whole of communities in which it wants to compete. The cable companies would continue to be obliged to do so under the principles being proposed. They are not happy and consider this (un)fair competition. I wonder if Cox's testimony at a committee hearing here in Louisiana can be compelled? Wouldn't that be entertaining?

This is the most poisonous aspect of the bill. BellSouth and the Bell companies nationally know that they cannot compete successfully against the cable companies if they have to compete head-to-head in every municipality they enter. By and large the cable networks are superior in capacity and already paid for. Fair competition is not something the Bells can even consider. They will never accept this. Should this bill be presented before the repeal bill and in the unlikely event that it passes the real spectacle will be watching BellSouth/ATT rush to advocate repeal in the very next bill on the docket, 245. (Ah, it's a fantasy, I know, but wouldn't that be fun to watch?)
4) The next several clauses of the proposed law impose various forms of net neutrality clauses, both old and new, on the private-but-publicly-funded incumbents. If passed, this bill would result in ground-breaking net neutrality provisions that put Louisiana far ahead of the national curve on devising ways to maintain an open internet. The issue was raised recently when widely quoted remarcks by telco CEOs stated their intend to change the current business model that fuels the internet. Legislation similar to this at a federal level is being stalled by the telecom lobby in Congress.
Fun testimony at a commerce committee hearing on the bill: Watching the "It's my network and I'll do what I want with it" defense of discriminating against competitors on "their" network collide with the testimony that documents just how much public funding was used to build the network originally and how much public support continues to this day.

Entertaining aspect: This part of the bill might result in fun national coverage since the net neutrality is a huge issue right now in geek, techno, and policy wonk circles. The laundry list of net neutrality provisions includes old ones like allowing any device to connect that are universally acknowledged as success--a similar federal provision years ago required Ma Bell to allow any phone to connect to their network and led to much cheaper, and much more innovative devices than those old, black phones you had to rent from the phone company. A great story could be written on the historical successes of network neutrality legislation just by reviewing this bill.

In short (I know I've not actually been short, but this is way too much fun.) HB 244 is a great bill to produce all the arguments anyone could ever need for the passage of HB 245, the outright repeal bill. I sincerely hope that 244 will get a full set of committee hearings in both the house and the senate. It'd be a rare opportunity to see a little florid political theatre enacted on Louisiana stage in a way that was positive for rather than embarrassing to the citizens of the state.

2 comments:

Anonymous said...

Recently you wrote about Cameron Telecom and how wonderful that company was. Please analysis the repeal of the "unfair competition act" from their persective. Will we be hurting the small telecom's.

John said...

anono,

Honestly, I am not sure how this would play out if actually implemented.

But really, I think you've missed a major theme in post

First, I do not expect 244 to pass and if by some amusing turn of fate it does pass I am quite certain that BellSouth/ATT would join the coalition of cities and parishes that had just forced this through and help them immediately repeal the new "Local Government (now really) Fair Competition Act using bill 245. It's terrible law now. Applying it equally to all would make it certain that all would eagerly fight to repeal it.

I cannot imagine, in my wildest dreams, that this bill will be the law of the land at the end of the session.

It's not intended to be law. It's intended to force the legislature to actually THINK. IF it gets a fair hearing it just might accomplish that. And entertain us all in the grand tradition.

[PS, this isn't "repeal" as your note might imply. it's an amendment equalizing the treatment of public and private providers. Real repeal would do absolutely nothing to effect a progressive locally-owned company like Cameron Telephone. Repeal would only restore the status quo ante with no effect on anyone except those that municipalities that had been virtually stripped of their ability to build desired infrastructure in their community using community resources.]